The Federal Reserve is navigating one of its most uncertain economic landscapes in years—without its usual compass. As the government shutdown grinds on, critical economic data from the Bureau of Labor Statistics and the Bureau of Economic Analysis has dried up, cutting off the flow of official metrics that underpin the central bank’s monetary policy decisions. This data blackout has forced the Fed to rely more heavily on private-sector indicators to assess the health of the economy. But just as that reliance deepened, a key source vanished.
ADP, the national payroll processing giant, has cut off the central bank's access to its timely employment data, The American Prospect reported earlier this week. The move follows public disclosure by Fed Governor Christopher Waller in an August speech, in which he revealed the central bank’s use of ADP-linked data to construct a weekly measure of payroll employment covering approximately 20% of the nation’s private workforce.
“This measure is comparable to the one ADP publishes,” Waller noted in remarks posted on the Federal Reserve’s official website.
The collaboration between the Fed and ADP dates back to 2018 and was first publicly acknowledged by Chair Jerome Powell in 2019, according to The Wall Street Journal. However, sources cited by The American Prospect said ADP was displeased with Waller’s explicit confirmation of the relationship, prompting the decision to halt data sharing. The consequences extend beyond operational inconvenience—central bank economists have incorporated ADP data into internal research and modeling, making its loss a substantive setback.
Even before the shutdown, the economic signals available to the Fed were sending mixed messages. Inflation continues to run above the central bank’s 2% target, while labor market indicators point to softening employment conditions—a rare and complex duality. Under normal circumstances, the Fed adjusts or leaves interest rates unchanged in response to clearer trends. This includes lowering them to stimulate growth during periods of rising unemployment, or raising them to cool demand when inflation accelerates amid tight labor markets.
Now, with both inflation elevated and job growth cooling, policymakers face a dilemma made sharper by data scarcity. The loss of ADP’s real-time insights further narrows the information window during a moment when clarity is most needed. With public data silenced by the shutdown and private sources retreating, the Fed may not have the ability to act with confidence.
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